Economy
Egypt seen keeping interest rates on hold on Thursday, poll shows
© Reuters. FILE PHOTO: A general view of the new headquarters of Central Bank of Egypt, at the New Administrative Capital (NAC) east of Cairo, Egypt December 8, 2023. REUTERS/Amr Abdallah Dalsh/File Photo
CAIRO (Reuters) – The Central Bank of Egypt (CBE) is likely to leave its overnight interest rates fixed at a policy meeting on Thursday, even though economic reforms are expected in the weeks following President Abdel Fattah al-Sisi’s re-election.
The National Election Authority announced on Monday that Sisi had won 89.6% of the vote for his third, six-year term in an election that saw no serious challengers.
Many analysts believe Egypt will wait until January, well after the Dec. 10-12 vote, before hiking interest rates or devaluing the currency.
The median forecast in a poll of 14 analysts is for the CBE to hold its deposit rate steady at 19.25% and lending rate at 20.25% when its regular monetary policy committee (MPC) meets. Six analysts expected a hike of between 100 and 300 basis points (bps).
“I don’t see much to gain from a hike at this point – on a sequential basis inflation is already coming down, and the weak GDP and PMI data tell you there’s no need to hike rates to curb demand,” said Simon Williams of HSBC.
“I do see policy tightening, but only in tandem with FX adjustment and fresh support from the IMF and others.”
Reluctant to allow changes, the CBE has kept the Egyptian pound fixed at 30.95 to the dollar since March and last raised interest rates by 100 basis points in September. The pound has since fallen to 50 to the dollar on the black market.
Some analysts, however, saw the CBE potentially moving before January.
“We envisage that the pound is devalued by more than 20% to 40 to the dollar and interest rates are hiked by 300 bps, to 22.25%,” said James Swanston of Capital Economics.
“Even if all of this isn’t delivered next week, a change in approach to macro policy will be needed soon and the MPC meeting gives an opportunity for officials to at least provide more guidance on the policy path,” Swanston said.
Egypt agreed in a $3 billion financial package with the International Monetary Fund (IMF) a year ago to let its currency float freely and to speed the sale of state assets.
Progress on both counts has been slow, prompting the IMF to delay disbursements.
But since Israel went to war in neighbouring Gaza in October, multilateral lenders appear to have softened their tone. The IMF said this month it had begun talks with Egypt on additional financing as part of its current program.
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
© Reuters. FILE PHOTO: Workers walk past an under-construction area with completed office towers in the background, in Shenzhen’s Qianhai new district, Guangdong province, China August 25, 2023. REUTERS/David Kirton/File Photo
SHANGHAI (Reuters) – China’s top planning body said on Saturday it had identified a second batch of public investment projects, including flood control and disaster relief programmes, under a bond issuance and investment plan announced in October to boost the economy.
With the latest tranche, China has now earmarked more than 800 billion yuan of its 1 trillion yuan ($140 billion) in additional government bond issuance in the fourth quarter, as it focuses on fiscal steps to shore up the flagging economy.
The National Development and Reform Commission (NDRC) said in a statement on Saturday it had identified 9,600 projects with planned investment of more than 560 billion yuan.
China’s economy, the world’s second largest, is struggling to regain its footing post-COVID-19 as policymakers grapple with tepid consumer demand, weak exports, falling foreign investment and a deepening real estate crisis.
The 1 trillion yuan in additional bond issuance will widen China’s 2023 budget deficit ratio to around 3.8 percent from 3 percent, the state-run Xinhua news agency has said.
“Construction of the projects will improve China’s flood control system, emergency response mechanism and disaster relief capabilities, and better protect people’s lives and property, so it is very significant,” the NDRC said.
The agency said it will coordinate with other government bodies to make sure that funds are allocated speedily for investment and that high standards of quality are maintained in project construction.
($1 = 7.1315 renminbi)
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
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